Trends in privately funded research and development tell a lot about the kinds of investments corporations are planning for the future, and what kinds of occupations will be growing or declining both in the United States and around the world.
Privately funded research amounts to 60 percent to 70 percent of all research and development in the U.S. Perhaps surprising to some, it dwarfs publicly funded research, which is funded primarily by academic and defense-based research grants.
National Science Foundation data on research and development funding shows profound changes in priorities over the past 20 years.
The top five private R&D funding concentrations for 2005 were:
1) pharmaceuticals: $34.8 billion
2) technical services (architectural, engineering, computer systems design, scientific services): $26.1 billion
3) non-manufacturing information technology (software, Internet, etc.): $23.6 billion
4) semiconductors: $18.7 billion
5) non-military transportation — auto: $16 billion.
By contrast, for 1991 the top five were:
1) non-military transportation — auto: $15.1 billion
2) machinery: $14 billion
3) chemicals (pharmaceuticals were not counted separately for that year): $13.7 billion
4) electrical equipment: $12.4 billion
5) technical services: $3 billion.
Sixth place was a close tie between stone/clay/glass, primary metals (such as steel), and rubber industries, all at $800 million.
What is the lesson?
The lists above show that privately funded R&D now heavily favors intangible commodities — software and services in particular. Even pharmaceutical products, nominally a manufacturing category, include a very high “intellectual property” component, while actual production costs are very low. Compare this to 1991 — only 17 years ago — where the concentration was still on manufacturing and “material” production.
The products of the top future industries are primarily ideas whose development rests hugely on the public, “open source,” collaborative resource that we may call “the body of scientific knowledge” taught in colleges and graduate schools and validated through public (“peer”) review. This is not necessarily a perfect process but certainly it’s not simply governed by market success. In economic terms, these are commodities with the qualities of “public goods.” They don’t function well as typical commodities — it’s hard to prevent unauthorized replication (“theft”), as in the case of electronic files, and it’s hard to exclude others from free usage.
This may explain the perverse obsession of Republicans, especially, with intellectual property protection in U.S. law and trade agreements. It reflects their unease that intangible, knowledge-based products and services may be in conflict with capitalist relations. It’s hard to keep “that new idea” locked up in your garage. But they are all the more determined to shove unreasonable intellectual property protections into trade agreements with weaker countries, to the effect that the latter often cannot afford life-saving medicines to fight defeatable diseases like malaria, not to mention AIDS.
The truth is that there is an important role for both public, open-source work and financial incentives in R&D and in innovation in general. But reforms are definitely on the agenda when, for example, pharmaceutical companies allegedly spend billions on developing a drug whose actual “newness” is very small compared to the 99 percent of its chemistry which is in the public domain. And that value — as in the bounty of erectile-dysfunction and restless-leg-syndrome remedies — often seems barely more than a marketing fad.
Meanwhile, our infrastructure deteriorates. And our education system, the chief resource required to supply the skills needed for the emerging occupations of the future, is in decline. Universal health and retirement coverage in the U.S. — a key requirement for a workforce expected to be always ready to move from job to job, career to career — lags behind all other industrial nations.
A people’s research and development policy must 1) redress the imbalances between public and private knowledge in current intellectual property law and international trade; and 2) direct investments to the public infrastructure needed to empower the people (the human capital) who must sustain the new economies envisioned.